Investors buy Axelum shares as lockdown measures ease

Market players snapped up Axelum Resources Corp. (AXLM) last week immediately after Metro Manila and surrounding areas returned to general lockdown, despite the coconut products exporter booking lower profit in the second quarter.

A total of 215.18 million Axelum shares worth P517.31 million were traded from Aug. 17 to 20, data from the Philippine Stock Exchange showed.

Shares in the company finished at P2.42 apiece last Thursday, 3% higher than the Aug. 14 close of P2.35. It has declined by 8% since the start of the year.

Local financial markets were closed on Aug. 21 in commemoration of Ninoy Aquino Day.

“We think that high investor participation seen on high volume [last Aug. 19] led the short-term rally on AXLM’s prices,” Claire T. Alviar, research associate at Philstocks Financial, Inc., said in an e-mail, referring to the ticker symbol for the company.

“This is along with the easing of community quarantine in the Philippines, particularly in Metro Manila,” she added.

Last Wednesday, Axelum’s total traded shares surged to 211.04 million worth P507.39 million after closing at P2.48 apiece.

Metro Manila and neighboring provinces were back under a stricter general lockdown from Aug. 19 to 31. This came after undergoing a restrictive form of community lockdown which started from Aug. 4 until Aug. 18.

This easing of lockdowns provided positive sentiment for Axelum during the week. Investors were also digesting the latest earnings results of the company, Ms. Alviar said.

Axelum’s net income during the second quarter plunged by nearly half to P82 million as revenues decreased by more than a tenth to P1.18 billion after its supply chains were affected by the strict lockdowns imposed during the period.

This brought its revenues for the first semester to P2.39 billion, 8.6% lower from a year ago, while its bottom line declined by almost half to P202.94 million.

Despite the profit decline in the second quarter, Axelum’s share price remained stable supported by its P500-million buyback program, with only P129 million being used so far, AP Securities, Inc. Senior Research Analyst Rachelle C. Cruz said in a text message.

“AXLM should be one of the companies in the consumer sector to recover first, as export sales comprise 92% of first-quarter sales. We expect external demand for its products to rebound as more countries ease strict lockdown measures implemented last Q2,” Ms. Cruz said.

She also expects Axelum’s margins to improve “sequentially” as prices of coconuts begin to normalize after most parts of the country transitioned to the less restrictive general lockdown.

“Costs are also weighing on the bottom line of the company. This will be the challenge of AXLM in the short run. While in the long run, we think that the bottom line of the company should improve to be able to trade around its P5.00 IPO (initial public offering) price,” Ms. Alviar said.

Following the strict lockdown measures, she sees Axelum finishing with P527.40-million net income by the end of this year, nearly a third lower than the P774.81 million it earned last year.

The analysts see Axelum to trade sideways in the coming weeks in the absence of fresh developments in the market.

Ms. Alviar gave support prices of P2.20 to P2.30, while resistance prices range from P2.53 to P2.60.

Meanwhile, Ms. Cruz pegged the support level at P2.13 to P2.35 and resistance at P2.65 to P2.90. — Michelle Anne P. Soliman|BusinessWorld

Source: Peso Economics